Trust is the foundation of every deal. Never work with people you don’t trust.

Trading in services is more profitable than trading in money. Think twice before passing up an opportunity to do someone a favor.

Don’t take anything personally—everything is strictly business.

Attacks always come when you least expect it—complacency can be fatal.

Keywords

Organization, Strategy, Morality, Strategy, Attack

In 1972, Francis Ford Coppola’s The Godfather opened in theaters. The movie was nominated for ten Oscars and won three, including best film. It is still considered a cinematic masterpiece.

Though the movie and the Mario Puzo book it was based on are often labeled crime stories, their roots run much deeper. “It’s a study of power,” Coppola once remarked. In fact, The Godfather is a treatise on the art of management.

The story teems with violence: adversaries are killed with a shot to the head, strangled in cars, executed in revolving doors, assassinated during massages. Or they bring a guy around by depositing the head of his favorite horse in his bed. But the violence is only a backdrop for Puzo’s theory of gaining and holding onto power through market domination and organizational structure.

Puzo could just as well have put his theories in a romance novel or a business thriller. His choice of the Mafia world was coincidence. He had read several books about the Mafia, he said, and they inspired him. He created some things himself and tried to picture others. The term “godfather” was relatively obscure before Puzo latched on to it. He discovered the word in a book about Sicilian family customs and popularized it in his book.

Today, one can watch The Godfather as if it were a modern Machiavellian manual: a collection of cunning rules in immoral garb. While we in no way want to encourage the behavior of the gangsters in Coppola’s movie, the film can provide brilliant advice for managers in the form of ten commandments—and one sacred rule.

1. Trust is the foundation of every deal. Never work with people you don’t trust. Corleone sends away a drug lord who infiltrates his territory, even though the gangster offers him 30 percent of his profits for protection.

2. Trading in services is more profitable than trading in money. Whenever possible, Corleone deals in favors rather than cash, cultivating personal loyalties that are worth more than cash. And because he always pays his partners first, his balance is always good—everybody owes him. Thus he can call in favors at any time without running up his own debts.

3. Never turn down a chance to do a favor for someone. And only ask for a favor once. The less often you call in your favors, the better the economy functions. Then you can rest assured that your requests will never be turned down.

4. Hierarchy is important. If Don Corleone’s status as godfather were disregarded, his decisions would not have the same weight. The Godfather is affable but not democratic. He lets others emphasize his rank so he doesn’t have to do it himself.

5. Don’t take it personally—it’s only business. That’s what killers say right before they shoot, and it's what a paterfamilias says just after he betrays his best friend. In business, taking attacks personally can cloud one’s judgment. Cooler heads typically prevail.

6. Don’t let anyone outside the family find out what you really think. Corleone confides his doubts and musings to no one apart from the closest members of the family. The consistency of his behavior makes him predictable, and his predictability strengthens his influence.

7. Every so often, the competition will force a purge. Don’t try to avoid conflict—take it on. In The Godfather, two New York families are in intense competition. They both have their own territories, but each nevertheless tries to squeeze the other out of the market. Every year, their tactics become more brutal. A major conflict ensues, and then they make peace. The families remember their shared values and agree on a code of conduct. Mario Puzo, in this case, is a true market liberal: it’s not the forces of order—the police, that is—that make the rules; it’s the market participants.

8. Recognize market shifts early and respond to them swiftly. Corleone got rich with gambling and prostitution, but he knows that the drug business will destroy him in the years to come. Because he fears damaging his own business, however, he fails to act aggressively in response to the growing demand for a new product with better margins. In the end, he loses both the old market and the new.

9. Transfer full power to your successor, support him unconditionally, and defer to him. When Vito Corleone exits the stage, his son Michael is fully empowered. The old man enthusiastically welcomes each of the young man’s decisions, sends all advice seekers directly to him, and passes out his own advice only in private. He avoids making the mistake of many company patriarchs, who often have trouble letting go.

10. Power seeps away. Defend yourself against small defeats. The Godfather stumbles when the competition poaches a couple of lower-level employees. The betrayal weakens his aura of invincibility. The competition takes note of this and makes overtures to members of the Godfather’s inner circle—and the downward spiral begins.

One rule is sacred, and death is the punishment for whoever breaks it: Never dishonor your family. Translated for managers, this means, “Your loyalty belongs to those who pay you. Their interests are your interests.”

Based on an essay by Christoph Keese for the Financial Times Germany and used with permission of the author.